Step 2: explaining it

the learner may simply have never learnt the form of the meaning
and is just stabbing in the dark. This is most common at lower
levels because that's where learners' needs often outstrip their
abilities to produce language.

Overgeneralising the rule

sometimes, when a 'rule' has been learned, learners will
over-extend it. For example, if you have learned the rule to
add -ed to make a past tense, it seems logical to form
catched. Equally, over-extending a rule might lead to the
production of wonderfuller.

First language interference

all learners, especially adult ones, will draw on language(s)
they know to try to figure out a new one. This is most obvious
in the area of pronunciation, of course, but occurs frequently in
other areas:
Structure: the learner's first language may have a structure that
looks similar but means different things. For example, the
German structure of ich habe gesehen [I have seen,
literally] often is better translated into English as I saw
rather than I have seen. That's only one reason for
finding out a bit about our learners' first languages.
Lexis: many languages, and not only European ones, have words which
look the same but have different meanings. For example,
simpatico in Italian means nice or friendly,
sensibel in German means sensitive and un
smoking in French is a dinner jacket. There are many
hundreds of these so-called false friends.

If the error isn't holding up communication and has nothing to
do with the subject of the lesson, it may be that correcting it will
lead you off on a tangent, chasing red herrings and serve to slow
down the lesson and confuse the learners. If that's the case
ignore it.
If, on the other hand, the error is impeding comprehension or is
made in the language that is the target of what you are doing, then
you will have to deal with it.

Question 2: do I need to correct this?

Very often, learners can correct their own production so a
quizzical look or stopping learners and getting them to
retrace their steps and reconsider may be more effective than your correcting the
error.

Question 3: can anyone else correct the error?

If the learners can't correct their own errors, perhaps someone
else in the class can. If you think this is the case, give them the
chance to do so.

Question 4: how will I correct?

A last resort is normally to give
the correct answer yourself. Often, learners can be led to discover
the right answer with questions and suggestions such as "There's
something wrong with the order of the words.", "What preposition do
we need here?", "What tense should this be?", "Are we talking about
tomorrow or today?", or "Is this a long 'a' sound or a short one?"
and so on.
If all else fails, however, there are, obviously, times when
providing the right answer is the best approach providing you make
sure that the learner can produce the correct language independently
after you have done so.